Disciplined Saving for Retirement Remains a Key Challenge
This year's increased market volatility did not dampen positive long-term views, but retirement saving challenges remain
That said, tracking data throughout 2014 suggest that investors are struggling with being disciplined about retirement saving:
- Many deprioritize retirement. Two out of five (40 percent) investors (and 58 percent of those under 34) agree that saving for retirement is difficult because they would rather spend on themselves today. And investors plan to use less than a third (28 percent) of their year-end bonuses to save for retirement.
- They are pulling from their primary source of retirement saving. Almost half (47 percent) of all investors under 34 have made early withdrawals from their 401(k), and half of this population relies on it as their sole retirement account.
"The end of the year is a natural time to review your retirement goals and the progress you made in achieving them," says
- Automate the burden. Setting up automatic contributions removes the guesswork from how much you will contribute each period.
- Look under the hood. Either on your own or with a financial professional, dig into the particulars of your plan. Review the critical components like asset allocation and fee structures, but also some of the lesser-known features. For example, some plans offer the ability to draw loans, which will give you options if you have a short-term setback. Additionally, for those 50 or older, several retirement plans offer increased contribution amounts, or 'catch-ups.'
- Harvest losers. Tax season is around the corner. Review your portfolio and consider selling positions that have lost value in order to offset capital gains from the year, and reinvest the proceeds in better performing positions.
- Do not leave money on the table. A variety of plans offer cash incentives. For instance, many employers offer 401(k) plans with a contribution match. For those with IRAs, make sure to contribute the annual maximum (
$5,500for those under 50, and $6,500for those 50 or over) to take advantage of the potential pre-tax dollar benefit.
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About the Survey
This wave of the survey was conducted from
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